Birchbox

Oh, what a year it has been for co-founders Katia Beauchamp and Hayley Barna and their unique online-only beauty retailer!

by Liz Barrett

After only one year in business, Birchbox continues to grow by leaps and bounds thanks to a one-of-a-kind business model, two savvy co-owners and an ever-growing team.

Is it possible for a brand-new online beauty retailer to grow from four employees to 45 in the span of one year? What about building a Facebook community of more than 50,000 and attracting more than 15,000 followers on Twitter? Growth like that seems almost impossible in such a short amount of time. However, when a company is able to bring something unique to the marketplace, you start to see some truth in that old “Build it and they will come” stuff.

Co-founded in September of 2010 by Harvard Business School classmates Katia Beauchamp and Hayley Barna, New York City-based Birchbox marries editorial content, product sampling and full-size product retailing.

Recently, Beauty Store Business sat down with Beauchamp and Barna to find out how their interesting business model works, what factors have aided in their company’s phenomenal growth and the important place Birchbox now holds in the prestige-beauty sector as well its future in the entire beauty industry.

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BSB: Where did the idea for Birchbox come from?
BEAUCHAMP:

Hayley and I came up with the idea for Birchbox when we were in business school, about six months away from graduation. Throughout our relationship in school, I always noticed how Hayley had the newest and best products. She always said that Mollie gave them to her. Mollie Chen was her best friend from her undergrad days, who had been a beauty editor and is now our director of content. That connection was definitely a huge part of the inspiration for the site.

We also began discussing the fact that it’s challenging for customers to discover beauty products because there’s so much product out there. Business school gave us a great foundation in thinking about industries where there was an opportunity to reimagine an existing status quo for customers and brands, and create a new value proposition. For the beauty industry, we were inspired by the opportunity to give customers the feeling of having a beauty-editor best friend, by selecting the product and merging content and commerce. For brands, we were inspired to build a service that created the best environment to connect with a qualified customer by merging editorial, marketing and retail sales.

Please tell us about what Birchbox is and how it works.
Beauchamp:

Birchbox is a place for customers to discover the newest and best in beauty. It is a 360-degree experience of discovery. In other words, they try samples, learn more about them and then can easily transact on full-size products.

It’s also a place where brands can find new customers and engage with them in an intimate environment—their home! Subscribers pay $10 per month, and they receive a box in the mail of four to five deluxe beauty samples. We editorialize everything that’s in the box on the website with articles about how to use the products, videos when necessary, blogs, etc. And as the customers are reading about the products, they can easily click through and buy.

Before anything, subscribers fill out a brief beauty profile and tell us a little about themselves, which allows us to choose the samples that are best suited for them. There’s a letter from the editor in the box, which Hayley, Mollie and I work on together. It provides a short description of the products and speaks about the theme of the month. We encourage subscribers to go to the site to find out more about each product.

What’s your mission?
Beauchamp:

[Everyone here is] very focused on being the best discovery service for beauty.

Who do you consider your competition?
Beauchamp:

We didn’t invent sending things in the mail and we didn’t invent sampling. But the way that we packaged Birchbox with sampling and content and commerce while creating a value proposition to our beauty partners is a different approach. And we are the only ones with that perspective.

[Photo caption: Subscribers in all 50 states receive their very own Birchbox each month. Photo credit: Courtesy of Birchbox, along with subsequent photos.]

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Who’s your average customer?
Beauchamp:

What’s been interesting to learn as we’ve grown as a company is that we really have a wide appeal.

We appeal to young women who are just getting into finding the products they’re going to love for years, older women who have been using the same products for years and haven’t changed their routine but are now finding new products as a result of Birchbox, beauty junkies, and those who absolutely hate to make that trip to Nordstrom or Sephora.

We definitely have a core customer; the average is a young professional who is savvy, urban and highly educated.

Hayley and I started the company thinking that this was something that we needed a lot of; the early customers we attracted really have a similar profile to us.

But as we’ve grown and received press and have had customers talk about us in social channels, the demographics are always changing. And we’re always nurturing that because we see a lot of value in all parts of the spectrum—the young girls who talk a lot and will be chatting about what Birchbox is and what they’re finding to the customers who are quieter but finding what they love.

Are men using the site?
Beauchamp:

We actually launched a limited-edition box for men for the holidays and that has been great for raising our awareness. It was interesting to see whether men would like it, and it did really well.

Men also want to be surprised and delighted, and they like to be educated in a way that’s tailored and edited down from all of the content out there.

What questions do you ask during the subscriber sign-up process?
Beauchamp:

We ask everything from age and where you live to your biggest beauty concerns, your hair type, if you classify yourself as classic or trendy, etc. It’s a simple questionnaire that can be answered in just a few minutes.

How do the customers’ answers help you fill their sample boxes?
Beauchamp:

It helps us curate each box. If we have a product that’s specifically targeting dry or color-treated hair, we make sure to send that to customers who have identified as that. If we have something that’s for sun protection and we have customers with fair skin and concerns about sun protection, we can send it to them.

It seems like the process for choosing products for so many people would be overwhelming. How does it work?
BARNA:

It can be difficult, but each month we decide on a theme that anchors some of those decisions. Some products are also classified as every-woman products because they have a wide demographic reach. Then there are products that are very specific, such as tinted moisturizer, antiaging products, etc. In the end, it is all based on our customers’ beauty profiles.

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What major factors have helped the site grow?
Beauchamp:

We’re really focused on creating a product that customers love and that’s what helps us grow. It gives them something to talk about and share with their friends, either in real life or online, and that’s absolutely the No. 1 reason we’ve grown so quickly.

Barna:

[I believe that it’s been] word of mouth and friend referrals in the offline world. When someone tries Birchbox for the first time, they just can’t wait to tell their co-workers, family and friends about the fun things they just got. And then social media has been a really big driver of our customer growth. YouTube, Facebook, Twitter and the beauty blogging community has been incredibly helpful in terms of spreading the word about Birchbox. People love to tweet when their boxes arrive, post pictures of what’s inside and compare what they got versus what their friends—offline and online—received.

How long have you been using social marketing?
Beauchamp:

We’ve always had a strong social-media presence and have encouraged open discussions.

Barna:

I think we started tweeting before we even sent out our first box. Our blog was up before our Web page was up. It’s been incredibly important to us from day zero. Mollie has led the charge on that from the beginning.

How many people do you currently employ?
Beauchamp:

We have 45 employees, with tech being one of our larger teams. But we have many different departments, including the beauty partnerships team, marketing, PR, editorial and operations.

How many brands do you carry?
Beauchamp:

We have about 150 different brands today, and the favorites are always changing.
Whenever we sample products, those pretty consistently become the most popular brands of the month.

We love that we’re introducing customers to large and small brands, and helping smaller companies start to find their consumer and larger companies find new audiences. That’s definitely a huge part of the service. We’ve had clear favorites in both the huge brands and the very small.

How do you encourage the purchase of full-size products?
Beauchamp:

Each month along with the sampling we provide descriptions about the products on the website, reasons why the customer should care about the products, and who else loves it—if that’s relevant. All of the information in front of them usually helps customers’ purchasing decisions.

Barna:

Also, the product ships free if they buy it in the month that it samples, so it encourages customers to take action quickly. So they try the products, decide which they love, go on the site and buy it while it’s being promoted with free shipping. Our customers are usually pretty fast to make decisions.

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Do you feel that the site is successful in driving consumer demand for beauty products?
Beauchamp:

We are both an ecommerce and a marketing channel. And we know that some customers are buying products from us, and some are buying the same products elsewhere because now they recognize the brands when they see them in the real world. We ask customers if they pick [up those brands] elsewhere. We are proud of the fact that we are growing the absolute pie and helping offline retailers as well.

Barna:

Another cool thing we’ve seen since launch is that we used to just sell the specific products we were sampling, but then we realized that consumers wanted to be introduced to other products from that same brand. So now, typically when we sample products from a particular brand we’ll also carry other products from that brand. When people decide that they love the brand, they may go on the site and decide to buy a full-size version of the sample they tried, or they might try other things from the same brand.

How many samples convert into full-size purchases?
Beauchamp:

A lot. It’s going really well, but it’s not a number that we’re openly sharing right now. We’re very focused on it, but we’re also focused on all of the channels—not just the Birchbox channel.

Are product discounts given to encourage purchases from Birchbox rather than other places?
Beauchamp:

We have a loyalty program, but we’re not playing in the discount realm.
We reward our customers for feedback, referrals and for purchasing full-size products. Those points they earn go toward gift cards that they can spend on the site; so effectively they’re getting a discount through the loyalty program by earning it.

Would you please explain the loyalty program in more detail?
Beauchamp:

Every 100 points a customer earns can be redeemed for $10 to spend on the site. Points are earned when customers refer friends (50 points), spend money (one point for each dollar) and fill out feedback surveys (10 points). So the points can be earned very fast.

How do you acquire new brands to carry?
Beauchamp:

We’re focused on finding the newest and best brands and working with brands that we’ve always loved.

Between the partnerships team and the editors, Mollie and I created a list when we first launched that had hundreds of brands on it that we wanted to work with and there was a lot of initial outreach there. Now we’re fortunate enough to get a lot of great brands reaching out to us.

If we don’t know the brand well, we get it and try it, and show it to a bunch of different people in the office to get a lot of different opinions. We research the product and brand, and that’s how we decide if it’s really a fit for us.

Are you still looking to add more brands?
Beauchamp:

We’re always looking. It’s really important for us to stay on top of what’s happening out there, so we’ll never stop looking. If someone wants to send us something for consideration, they can email beautypartners@birchbox.com, and we’ll either schedule a time to chat or ask them to send us some products to try and schedule a meeting from there.

How do you solicit your customer feedback?
Beauchamp:

The products have surveys associated with them every month, but we also—every other month or quarterly—survey our subscribers to get feedback on the service and how we’re doing. Hayley and I still talk to subscribers every week, and our customer-service team is incredible and always keeping us in the loop as far as what the vibe is out there and what people are saying. We’re very in touch with feedback.

[Photo caption: Birchbox has already won many prestigious awards and honors.]

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Please tell us about the magazine and the blog.
Beauchamp:

Since Mollie was a beauty editor and our first hire, we’ve always had content as a big part of what we’re doing. There’s a lot of information about products online, but it’s all very separate from the other things customers are doing, which is finding products, trying them and then trying to shop them. So for us what made sense was bringing the content to you relevant to the products that you’re trying and also in an environment where you can shop.

The magazine launched from day one and really focused on supporting the products we were selecting to be in the box in addition to other products that made sense seasonally and theme-wise. We also write about things that we don’t sell. That continues to be what we do today. We have a larger editorial team than we did in the beginning, but its focus is creating content for the magazine and our blog and promoting it [through] social channels. We also create quite a bit of video that lives in the magazine section of our site. All of the different channels tie into one another. Everything is co-merchandised. If you’re reading an article, you’ll see products that relate to it will be merchandised in the story alongside. If you’re in an ecommerce environment looking at a product, you’ll see that we link out to articles, and we have relevant videos embedded.

What do viewers see in your videos?
Beauchamp:

You can find all of our videos at birchbox.com/video/list, and they are largely how-to content or short-form product videos about what a product is like, what you should expect, etc.

What are the pros and cons of being an online-only store?
Beauchamp:

Our focus is to solve the problem of discovery, and we felt online was a great place to accomplish that goal. Discovering beauty products online is especially challenging because you want to smell it and try it and touch it and that’s really hard. So our vision with Birchbox was to solve part of that problem by having our offline product, the Birchbox.

We certainly miss out on people just walking by and coming into a store, which is—especially in New York City—a big part of how you can sometimes find the store itself.

And, of course, we are targeting a certain demographic of customers who are shopping online and who are comfortable shopping online—and that’s definitely a smaller pool than the total potential audience.

On the flip side, we can be everywhere in the United States at once with one store, which is really powerful. And we can truly capitalize on social media because when people are talking about us, there’s something for them to easily link to and send people to.

What’s next for Birchbox?
Beauchamp:

We really want to deliver the best to our customers. We want to deliver the most amazing service to our brand partners. We also want to be seen as partners in this entire, huge beauty industry that’s filled with very smart people.

We’ve had an incredible first year, but we feel like there’s so much more we can do to be a contributing member of the ecosystem. That means building out what our offering is, working on how our marketing and editorial continues to work together, growing our subscriber base and continuing to think and ask about what else our subscribers want from us.